Top companies, investors hoping for sweeter dreams
By ROBERT TRIGAUX
Published June 9, 2003
Ever wonder what the chief executives of the Tampa Bay area's leading companies mutter in their sleep? Well, we've captured their dreamy remarks, proving that CEOs think - and fret - about business challenges around the clock.
This year is no different as CEOs running the top 10 area corporations struggle with sharp competition, a yet-to-ignite economy, strategies gone bad and headaches inherited from their predecessors. Hey, that's why they get those big bucks. Right?
Let's briefly listen in on the nighttime thoughts of the 10 restless CEOs who run the public companies that make up this year's Times 10 rankings.
1. A tech rebound? What tech rebound? - Steve Raymund of Tech Data Corp.
2. You mean there's an even cheaper country in which to build a factory? - Tim Main of Jabil Circuit.
3. Power! Get your cheap power! Any takers? Curse that Enron! - Bob Fagan of TECO Energy.
4. Can we get them to try Bloomin' Onions for breakfast? - Chris Sullivan of Outback Steakhouse.
5. Wall Street, can you hear me? Hello, hello? - Don DeFosset of Walter Industries.
6. First and 10! Please do it again! Go Bucs! - Tom James of Raymond James Financial.
7. A Kodak Moment I wish we'd missed. - Lang Lowrey of Danka Business Systems.
8. I love the profitable smell of oxygen in the morning! - John Byrnes of Lincare Holdings.
9. Watch your back, Danka. I'm right behind you. - Tom Johnson of Global Imaging Systems.
10. A boat is a hole in the water into which customers pour money. Thank goodness. - Bill McGill of MarineMax.
While we're eavesdropping on thoughts, let's imagine a bay area investor's nighttime musings: If I had purchased $100 worth of shares five years ago in each of the Times 10 companies, would I be enjoying a small fortune today?
Hold on to your wallet while we review the state of the companies.
At Clearwater's Tech Data, a giant wholesale distributor of computer equipment, Raymund recently told me he hears plenty of talk about a tech rebound. But he sure doesn't see it in his business. A multinational company whose annual sales topped $20-billion just two years ago has now seen its revenues skid 23 percent. And Tech Data reported an annual net loss in 2003 after many, many years of operating in the black.
A $100 investment in Tech Data in 1998 would be worth $59 five years later. Yet that still outperformed many Tech Data competitors.
St. Petersburg's Jabil Circuit must be doing something right because the electronics contract manufacturing industry is littered with the remains of its peers. Like it or not, one of Jabil's aggressive moves is to ship more of its manufacturing overseas to lower-cost countries. In a world that pants for computer gear at ever-lower prices, slashing costs seems inevitable.
A $100 stake in Jabil in mid-1997 would have grown to $126 five years later.
TECO's Fagan bet big several years ago that deregulation of the power industry would justify his high-price building of power plants across the country's growing Sunbelt. Then Enron collapsed, and the California deregulation disaster stunned the nation's plan for competitive electricity markets. Now it's a contest of time. Can Tampa's TECO hunker down until its untapped power plants find enough paying customers?
The $100 invested in TECO five years ago has dwindled to $73, well below the returns of most other power companies.
With customers lined up waiting for tables at most Outback Steakhouses and plenty of Carrabba's, what's not to like? Sullivan captains a successful ship, even if some smaller and younger Outback-owned chains - Roy's, Bonefish Grill and Fleming's among them - are still trying to hit their stride.
Small wonder the $100 in Tampa's Outback five years ago turned into a $180 stake, well above the return of most restaurant companies. But it's a tough and fickle business. Can Sullivan keep his lines long?
At Walter, DeFosset is imposing the corporate equivalent of a Weight Watchers diet. In other words, Walter is trying to shed its conglomerate holdings and refocus on homebuilding and related businesses. That way, Walter's CEO hopes, Wall Street might find the Tampa company's "story" easier to understand and pitch it to investors.
After five years, a $100 initial stake in Walter would have shriveled to $79.
At Raymond James, executive Barry Alpert says he spends a lot less time telling people around the country who and where Raymond James is now that the Tampa Bay Buccaneers are Super Bowl winners. Grabbing the naming rights to Raymond James Stadium was a publicity coup.
If only the stock market would improve enough to revive investor confidence. That's when the St. Petersburg brokerage might enjoy its own rebound.
After five years, $100 in Raymond James shares turned into $119.80 by the end of 2002.
Poor Danka. The copier and office equipment servicing company has been digging out from an ill-fated, debt-loaded mega-acquisition of Eastman Kodak's global copier business nearly seven years ago. Ever since, Danka has struggled to pay off or, more often, refinance its loans, trim its costs and streamline its operations.
Here's a twist. Shares of St. Petersburg's Danka generated the best two-year return among the Times 10 companies. Of course, two years ago Danka shares struggled - ouch - to stay above a dollar. How about five years ago? A $100 investment then in Danka would have shrunk to less than $25 by the end of 2002.
Is there any hidden gem among the Times 10? It may rank at No. 8 by sales, but Clearwater's Lincare Holdings is No. 1 this past year in revenue growth and profit growth and return on equity. And that $100 you put into Lincare five years ago would grow to $222, the biggest return of any Times 10 investment.
Tampa's Global Imaging Systems may not like the comparison, but the office equipment distributor is kind of a Danka Business Systems - before it stumbled. Global has grown rapidly via acquisitions (as Danka once did). Though its sales were roughly half those of Danka last year, Global enjoyed three times the profits. The clincher? Global's market value (stock price times number of shares) was nearly $160-million larger than Danka's. Is there a marriage in their (distant) future?
A $100 stake in Global Imaging in mid-1998 (it was not public earlier) would have turned into $159 by the end of fiscal 2002. Contrast that to Danka.
Rounding out the Times 10 is Clearwater's still young MarineMax. The recreational boat seller has only been public since mid-1998, when it pitched itself as a budding AutoNation for boats. A $100 stake in the company in '98 had faded to the low $70s by the fall of 2002, but it's been a rough couple of economic years, right?
So, let's look at the bigger picture. Did the Times 10 companies - combined - deliver a solid return to investors? Alas, the 5-year returns are evenly split.
Half the companies' shares declined. And half increased.
The bottom line: Over the past five years, an investor's portfolio of these 10 stocks would be worth little more than the $1,000 with which he started.
Here's hoping the next five years will generate stronger returns from Tampa Bay's top companies, not to mention fewer restless nights for executives and investors.
